Russia Retaliates at the EU's Proposal to Lend Frozen Moscow's Assets to Ukraine

Kyiv remains facing a severe shortage of funding to maintain its military and economy, after almost four years of full-scale conflict with Russia.

In the view of European leaders, the answer to addressing Ukraine's budget hole of €135.7bn for the following biennium lies in Moscow's immobilized funds held by Belgian bank Euroclear, and EU leaders hope to give it the green light at their meeting in Brussels next week.

Moscow's representatives warn the EU plan would be an act of theft, and Russia's central bank stated on Friday it was taking to court Euroclear in a Moscow court ahead of a final decision is made.

'Just' to Employ Moscow's Funds, Assert European and Ukrainian Officials

All told, Russia has approximately €210bn of its assets immobilized in the EU, and €185bn of that is held by Euroclear.

European and Ukrainian authorities maintain that those funds should be used to restore what Russia has devastated: The European Commission calls it a "reparations loan" and has proposed a plan to prop up Ukraine's economy valued at €90bn.

"It is only just that Moscow's blocked funds should be used to reconstruct what Russia has destroyed – and that those funds then becomes Ukraine's," states Ukrainian President Volodymyr Zelensky.

Chancellor Friedrich Merz says the assets will "allow Ukraine to defend itself efficiently against future Russian attacks".

The legal move by Moscow was anticipated in Brussels. But it is not only Moscow that is unhappy.

Belgium is anxious it will be saddled with an huge bill if it all goes wrong, and Euroclear CEO Valérie Urbain warns using the assets could "disrupt the international financial system".

Euroclear also has an estimated €16-17bn immobilised in Russia.

The leader of Belgium Bart de Wever has presented the EU with a series of "logical, sensible, and warranted conditions" before he will endorse the reconstruction loan scheme, and he has refused to rule out legal action if it "carries significant risks" for his country.

What is the EU's Proposal?

The EU is racing against time prior to next Thursday's summit to agree on a solution that Belgium can agree to.

Until now the EU has refrained from using the assets themselves directly but for the past year has directed the "extraordinary revenues" from them to Ukraine. In 2024 that was €3.7bn. Juridically, using the profits is seen as safe as Russia is under sanction and the earnings are not Russian sovereign property.

But international military aid for Ukraine has fallen significantly in 2025, and Europe has had trouble trying to make up the gap resulting from the US decision to virtually halt funding Ukraine under President Donald Trump.

There are at the moment two EU options aimed at furnishing Ukraine with €90bn, to cover a large portion of its budgetary necessities.

• Option one is to secure the capital on capital markets, backed by the EU budget as a surety. This is Belgium's first choice but it requires a consensus by EU leaders and that would be difficult when Budapest and Bratislava oppose funding Ukraine's military.
• The alternative is loaning Ukraine cash from the Russian assets, which were originally held in securities but have now mostly turned into cash. That funding is owned by Euroclear deposited at the European Central Bank.

The European Commission recognizes Belgium has legitimate concerns and states it is convinced it has addressed them.

The proposal is for Belgium to be safeguarded with a insurance covering all the €210bn of Russian assets in the EU.

Should Euroclear incur losses of its own assets in Russia, that would be offset from assets belonging to Russia's own clearing house which are in the EU.

In the event that Russia targeted Belgium itself, any ruling by a Russian court would not be enforced in the EU.

In a significant move, EU ambassadors are set to approve on Friday to freeze indefinitely Russia's central bank assets held in Europe permanently.

Until now they have had to vote unanimously every six months to renew the freeze, which could have meant a repeated risk to Belgium.

The EU ambassadors are expected to use an special provision under Article 122 of the EU Treaties so the assets continue to be immobilized as long as an "clear risk to the economic interests of the union" continues.

The Reasons Belgium is Still Not On Board

The Belgian government is adamant it remains a strong supporter of Ukraine, but sees legal risks in the plan and fears being shouldering the fallout if things go wrong.

A usually divided political landscape in this case has come together in support of Prime Minister Bart de Wever, who is under pressure from other European officials.

"The Belgian economy is not large. Belgian GDP is approximately €565bn – imagine if it would need to carry a €185bn bill," notes Veerle Colaert, professor of financial law at KU Leuven University.

Although the EU might be able to arrange enough guarantees for the loan itself, Belgium fears an additional danger of being exposed to extra legal costs.

Prof Colaert also believes the demand for Euroclear to provide a loan to the EU would contravene EU banking regulations.

"Banks need to adhere to stability regulations and shouldn't concentrate risk. Now the EU is instructing Euroclear to do precisely that.

"Why do we have these banking laws? It's because we want banks to be solvent. And if things turn sour it would fall to Belgium to rescue Euroclear. That's another reason why it's so important for Belgium to obtain absolute guarantees for Euroclear."

Europe Facing Strain from Multiple Fronts

The situation is urgent, state a group of EU member states including those neighboring Russia such as the Baltics, Finland and Poland. They argue the proposal to use Russian funds is "the economically realistic and politically achievable solution".

"It's a matter of destiny for us," says leading German conservative MP Norbert Röttgen. "If the plan collapses, I don't know what we'll do afterwards. That's why we have to succeed in a week's time".

Although Russia is unyielding its money should not be touched, there are further worries among EU officials that the US may want to deploy Russia's frozen billions in another way, as part of its own peace plan.

Zelensky has indicated Ukraine is in discussions with Europe and the US on a reconstruction fund, but he is also aware the US has been talking to Russia about possible partnership.

A preliminary version of the US peace plan suggested $100bn of Russia's immobilized capital being used by the US for reconstruction, with the US {taking|receiving